Capitalism Drops Britain’s Holcim Unit, The Lafarge Syria Scandal: What Happened Then?

That revolutions eat their own children is more than a statement. The idealists of the French Revolution were guillotined, those of the USSR in Stalin’s hell. Even libertarian revolutionaries are usually unlucky. Ask British Prime Minister Liz Truss and her hapless sidekick Kwasi Kwarteng. The two have been committing “Kwamikaze” according to all the rules of the art in recent weeks, as mockers say. But one after the other:

On September 22, the new Minister of Finance Kwarteng presented his ‘mini-budget’. This time, nouns do not equal omens. The innocent term “mini-budget” hides a program for a libertarian revolution that the finance minister and his prime minister wanted to launch.

Kwarteng is more than a financial professional. He is a seasoned libertarian and co-author of a 2012 pamphlet entitled Britannia Unchained. In addition, the former hedge fund manager has connections in the relevant liberal think tanks, which also do mischief in London.

“Britannia Unchained” is about the fact that the British should finally focus on Asia, especially Singapore. The average city-state worker works two hours and 20 minutes more than the average Briton, it says. Of course, the usual diatribes against an expanding welfare state, against too high taxes and against too much regulation should not be missing.

Singapore has also been the role model for Brexit lawyers for years. One of their promises was to make London a “Singapore on the Thames”. Freed from the shackles of the EU, the UK will regain its old grandeur, as they once pompously promised. The fact that these promises were questioned by all serious economists and that they were outside of political reality was ignored. With Brexit, the British went on a march to cuckoo country. Or as Jonathan Freedland puts it in the Guardian:

With the slogan “Get Brexit Done”, Boris Johnson achieved a landslide victory in late 2019 – further leading the British into cuckoo country. The future Churchill was not afraid to question contracts that had already been negotiated with the EU. Meanwhile, he promised the exhausted workers of the north generous social programs and an economic revival, while promising the environmentally concerned middle class in the south a British version of a Green New Deal.

All this soon turned out to be a utopia. Rather than rise to new splendor as “Singapore on the Thames”, London’s financial center lost some of its influence. The promised free trade agreements have not materialized, especially with the US. Instead, economic realities took over. Britain’s gross domestic product started to contract and there was no investment.

As in the 1970s, the UK is once again the ‘poor man of Europe’, with a working class that doesn’t know how to heat their homes next winter and a middle class that doesn’t know how to pay their mortgages.

Enter Thatcher wannabe Liz Truss. After putting his foot in his mouth too much and resigning, Johnson wanted to step up in the style of Ronald Reagan – Margaret Thatcher’s soul mate – and use violence to force the UK on a growth path.

Now the British had finally arrived in cuckoo country. Economically, Kwarteng’s “mini-budget” was adventurous. It provided tax breaks for the rich and corporations and – because of skyrocketing gas prices – subsidies for everyone. Neither was co-financed, ie it had to be done on credit, at a time when inflation was threatening to spiral out of control.

In doing so, Truss overlooked two details, an economic one and a political one. As for the economy, Reagan was able to run such a program at the time because the US is a superpower and the dollar is the global reserve currency. In the case of Britain, both are wishful thinking.

Unlike Christoph Blocher, for example, Truss has also refrained from embedding her libertarian economic policies populistically. In doing so, she ignored the fact that libertarians represent a small minority. In the New York Times, Paul Krugman mockingly called them “white men who wear bow ties.”

Without a political base, Truss had no chance. The Brexiteers’ slogan “Take Back Control” has finally become a hollow phrase, as the markets have now effectively taken control. In response to the ‘mini-budget’, the British pound has plummeted and government bond yields have soared. To avoid catastrophe, the Bank of England had to step in.

Within weeks, Liz Truss has become a walking political corpse. She had to fire her finance minister and opinion leader Kwarteng and replace him with the moderate Jeremy Hunt. He immediately withdrew his predecessor’s ‘mini-budget’, except for a few details, and is now the de facto strongman.

Liz Truss may only remain in office until Conservatives agree on a genuine replacement. Until then, she will remain the butt of biting ridicule. Yes, you would almost feel sorry for her. But only almost. She more than deserves it.

The United Kingdom, on the other hand, is going through difficult times. “In six short weeks, Britain has reached Italy’s political preconditions and debt,” Camilla Cavendish laments in the Financial Times. “But unfortunately without the accompanying sun.”